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Business plan-plastic

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SAMPLE document for the guidance of entrepreneurs

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Business plan-plastic

  1. 1. Downloaded from www.binodpandey.wordpress.comObjectivesThe objectives for this business plan are specific goals which are achievable by KshitizMulticraft in the first few years of operation. These objectives are outlined below:1. To Make Sales of over 30 million in 3rd year and over 60 million in 6th year.2. To increase from single industry to three industry in 10 years.3. To Increase gross margins.4. To export our products in foreign market. 1
  2. 2. Downloaded from www.binodpandey.wordpress.comMissionThe mission of Kshitiz Multicraft is to become a recognized manufacturer of quality plasticmaterials such as; tank, buckets, jugs etc. in the Nepal. The company guarantees 100 percentcustomer satisfaction and values friendly service. Kshitiz Multicraft seeks to manufacture plasticproducts by exceeding minimum acceptable quality standards and by providing the highestquality product at the lowest possible price. We value our relationships with current and futurecustomers and hope to communicate our appreciation to them through our outstanding,guaranteed product quality, personal service, and efficient delivery. Our commitment to ourcustomers and the country will be reflected through honest and responsible business.Keys to SuccessThe following facts of Kshitiz Multicraft ensure its financial success:1. Unique services, unmatched in both quality and presentation.2. Low operating overhead.3. Beneficial word-of-mouth advertising.4. A healthy, versatile plastic products which is suitable for all community.5. Bringing the new facility to maximum production within three years of operation.6. Increasing our profit margin with the use of improved technology in the new facility. 2
  3. 3. Downloaded from www.binodpandey.wordpress.comCompany SummaryKshitiz multicraft sells quality products and provides excellent customer service for customersseeking a reliable domestic plastic utilities and water storage solutions. In the future Kshitizintends to enter the extensive Plastic market.Company OwnershipKshitiz Multicraft is a privately held organization. Production takes place in Kathmandu andsales and marketing are focused on the whole of the country.Ownership:Founder’s (40%)Others (60%)Start-up SummarySixty percent (60%) of start-up costs will go to assets. Start-up costs will be financed through theowners investments, and loans. The assumptions are shown in the following chart.Startup Investment Nrs. In ‘000 1. Land and land development 44000 2. Building and civil construction 25245 3. Plant, machineries & equipments 20700 4. Furniture & fixture 1000 5. Vehicles 12000 6. Pre-operating cost 1000 Total Fixed Assets 103945 Long Term Loans @ 60% 62367 Owner’s Equity @ 40% 41578 3
  4. 4. Downloaded from www.binodpandey.wordpress.com Startup Investments 50000 NPR 44,000.00 45000 40000 35000 30000 NPR 25,245.00 25000 NPR 20,700.00 20000 15000 NPR 12,000.00 10000 5000 NPR 1,000.00 NPR 1,000.00 0 Land and land Building and civil Plant, machineriesFurniture & fixture Vehicles Pre-operating cost development construction & equipments 4
  5. 5. Downloaded from www.binodpandey.wordpress.comCompany Locations and FacilitiesThe Kathmandu Factory is located at Chovar, KathmanduThe factory is 1000 square meters and should be large enough for the first three years of thecompanys growth.The products will be transported to and distributed from from various company offices at Itahari,Hetauda, Butwal and Central office at Kathmandu. The infrastructure at factory consists of:  Administration Block  Manufacturing Building  Storage/Ware HouseSite SelectionChovar, Kathmandu will be our site where our industry naming “Kshitiz Multicraft Pvt. Ltd.”Will be established. The basic reasons behind this site selection are as follows 1. Easy access to transportation as this location. 2. Since our products will be focused on Kathmandu and other districts of Nepal, it will be easier to deliver our products to all places as required. 3. Land cost are quite cheaper in comparison to other places of Kathmandu. 4. Kathmandu is selected as industry location so that technical manpower are easily available. 5. There are proper facilities available in the site like water, electricity and communication. 6. Easy availability of labour, skilled and unskilled manpower. 7. The cost of living is superior than other places. 5
  6. 6. Downloaded from www.binodpandey.wordpress.com Plant Layout Domestic Products and Tank Manufacturing Unit other plastic Items production unitsPower ParkingStation Park Finished Goods WarehouseGuardHouse Raw Material Storage Entrance 6
  7. 7. Downloaded from www.binodpandey.wordpress.comProduction SchemeThere will be various production scheme for polyethene tanks and domestic plastic products. Theproduction scheme are shown in table below.Production Scheme for TankSn. Particular Volume Unit Remark1 250 ltr 702 500 ltr 703 1000 ltr 1505 Tank 2000 ltr 406 4000, 10000 ltr On demandProduction Scheme for Plastic utilities Sn. particular Sizes unit Remark 1 Bucket Large 200 2 Bucket Small Various sizes 100 Various colors 3 Jug 200 4 Tub 300For Recycled ProductSn. particular sizes unit Remark1 Dustbin 50 Green2 Road Divider 10 Orange 7
  8. 8. Downloaded from www.binodpandey.wordpress.comMarket Analysis SummaryThe purchase of domestic and other Plastic Products has increased by 50 percent over the pasttwo years. We expect the sales to continue growing, and to capitalize on this ever-present marketfor products - people will always need and buy daily plastic products.Market NeedsGrowing Population in city areas needs domestic plastic products and water storage tanks. Watertanks are essential for the city people as well as all industrial and service sectors like hotels,hospitals etc, as there is increasing problem of water. So for storing the water for dailyconsumption water tanks will be must.Market TrendsKshitiz Multicraft will distribute the Products to Kathmandu and various other outlets fromvarious company agents.  The cost of marketing the new product is expected to be the biggest challenge for Kshitiz. The initial use of Hardware shops for water tanks and Departmental Stores and other wholesalers for domestic plastic products, facilitates as a distribution channel will allow for cost savings.  The lack of an existing recognized brand name will be an initial problem, but in a few years Kshitiz intends to have achieved powerful brand equity - allowing it to rely on, and succeed because of its brand name.Market GrowthThe leading competitor is Hilltake Polytank and Gem Plasticrafts.Consumers often only buy a new water tanks 5 to 10 years, and domestic plastic products veryfrequently. Therefore, advertising of water tanks will be increased during the Dry seasons. Dueto the unmatched quality we are quite sure that our market grows upto 50% of total marketwithin few years. 8
  9. 9. Downloaded from www.binodpandey.wordpress.comMain CompetitorsThe main competitor of Kshitiz Multicraft poly tank is as follows: Hilltake Industries pvt. Ltd. Nepatop Tank Industries . Rijalco Polytank industries.Detail analysis of one of the tank industries is mentioned belowHill TakeHilltake industries is located in Biratnagar and Balaju. In Balaju it is located within BID (BalajuIndustrial District) and its production facility is accommodated in two ropani of land. The landhas been taken in lease with BID.It is one of the leading poly tank producing industries of Nepal. It can produce six tanks at atime. Hill take is the major contributor to market. It occupies nearly 65% of the market share andno single industry is able to compete with Hilltake. Besides tank, it also produces dust pan, roaddivider, PPR pipes etc.Established: 2052 B.SRaw materials: LLDPE Master granules/batch Imported from Saudi Arabia, MalaysiaMachines and equipments: s.n. Machines specification Nos. Unit price Total 1 Screw m/c 2 2 Heater (12000 watt) 2 3 Powder m/c 2 4 Die ---- 5 Control panel 1 6 Electric fan ---- 9
  10. 10. Downloaded from www.binodpandey.wordpress.comProduces tank of following capacities 100 lt. 1500 lt. 250 lt. 2000 lt. 500 lt. 5000 lt. 750 lt. 10000 lt. 1000 lt.Daily production capacity: Can produce six tanks at a time Takes nearly 25 min to produce one tank Operates 8 hrs a day So, total capacity is around 115 tank per dayEmployment generated: General manager-1 Manager-3 Operator-10 Officer level employee-20 Labours-35 Drivers-7 Other staffs-15 Total- nearly 95 10
  11. 11. Downloaded from www.binodpandey.wordpress.comThe main competitor Kshitiz Multicraft HDPE plastic products is: Gem plasticrafts pvt. Ltd. Bagmati polyethene industries.Gem Plasticrafts Ltd.Introduction: Established in 2041 B.S. Located in Basundhara, Kathmandu. Produces household products such as; Buckets, Jugs, Mugs, Hangers etc. Production facility is accommodated in three ropani of land.Raw material: HDPE(high density poly ethylene) HDPE is imported from Saudi Arabia Cost of HDPE is Rs.160 per kilogram Consumes one ton per dayMachines and equipments:sn. Machine specifications Unit Cost1 DGP WINOSOR Polo-180 (Chinese) 1 35 lakh2 Indian machine 1 40 lakh3 Mitsubishi 550 HG 1 2 croreProducts:s.n. Product name Weight (gm.) Volume (lt.) Price(Rs.)1 Bucket big 740-750 30 Bucket small 450 152 Jug 120-125 23 Mug 50 1 11
  12. 12. Downloaded from www.binodpandey.wordpress.comStrategy and Implementation Summary Kshitiz Multicraft strategy is to serve niche markets of the plastic industry. There aremany untapped potential markets that desire high-quality goods, but do not know where topurchase them. Kshitiz Multicrafts marketing strategy will alleviate this problem.Marketing StrategyThe marketing strategy will focus on two segments: 1. The company will benchmark the objectives for promotion, outlet selling, and personal selling. 2. The marketing budget will be Rs 6,00,000 per year. 3. Financial scheme such as cash discount, turnover discount etc will be provided to dealers and other schemes like cash prizes will be for customers.Pricing StrategyThe pricing strategy will be to initially undercut our price from our main competitors by 10%,using a market penetration strategy. Then, pricing will be adjusted to be directly competitivewith the other major competitors.Promotion StrategyPromotion will be initially spearheaded by public relations because of its low cost, and thenthrough advertising once the company begins to increase cash flow to an acceptable figure.Sales StrategyKshitiz Multicraft’s sales force will move form shop to shop for initial marketing and launchvarious schemes like warranty, 50% value on return of damaged products after use and othervarious financial benefits scheme. 12
  13. 13. Downloaded from www.binodpandey.wordpress.comSales ForecastThe following table and chart show our present sales forecast for first six years. Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Sales 203152.50 270870.00 338587.50 406305.00 474022.50 541740.00 Others 0 0 0 0 0 0 Total Sales 203152.50 270870.00 338587.50 406305.00 474022.50 541740.00 Table No: 5 Sales Forecast1 Sales Forecast 600000.00 500000.00 400000.00 300000.00 200000.00 100000.00 0.00 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Sales ProgramsSales will be made by Hardware and sanitary wares shops for water tanks and all daily utilitiesstores and departmental store for domestic products. Outlets that achieve the highest figures insales will receive 2% discounts in order to encourage increasing sales.1 See financial analysis for detail 13
  14. 14. Downloaded from www.binodpandey.wordpress.com Organizational Chart General Manager Production & sales & Marketing Maintenance Finance & Admin Manager Maintenance MarketingProduction engineer Accountant Engineer PRO Driver ClerkOperator Technician administration Staff 14
  15. 15. Downloaded from www.binodpandey.wordpress.comOrganizational Structure Kshitiz Multicraft will be a Partnership Organization. Legal matters and writtenagreements are being handled by Thapa & associates.The company is organized into three main functional areas: Sales and marketing. Finance and administration. Production & maintenanceManagement Team  Kamal Bdr. Shahi: Managing Director. Graduated from the Tribhuwan University of Kathmandu (major: management). Originally from Kalikot and has worked for a Khalid Mohammad company for two years in Dubai, UAE. Familiar with the government, policies and key people.  Bikash Acharya: Sales Incharge. Previously manager of an exclusive plastic industries in India, for three years. MBA in Marketing from Kathmandu University.  Shiva Kumar Thapa: Production Incharge. Will be in charge of production and maintenance. Graduated from Tribhuwan University with B.E. degree in industrial.  Narendra Kr. Mandal: Finance and Administration Incharge.Management Team GapsEach of the three employees is responsible for managing his or her area of expertise. Theproblems with having only one individual in charge of a department are as follows: 1. Lack of understanding of other departments. 2. Minimal management experience. 3. Sole control over all operations.Personnel PlanThe personnel plan indicates one employee for each department: • Production/Fulfillment. • Sales and Marketing. • Administration.Beginning in 2014, there will be two employees in both Sales and Marketing and Administration. 15
  16. 16. Downloaded from www.binodpandey.wordpress.comProduction planThe raw materials, after purchasing is stored in store room. It is then fed to the production floorto obtain the product as required. The type of process that must be carried out in production floordepends upon the nature, size and type of finished product.Production of Tank Raw material Storeage Accelerator operation Screw Machining Powder Machining Temporary Storage Die filling uniform heating Tank Fig. Process flow diagram for tanks 16
  17. 17. Downloaded from www.binodpandey.wordpress.comTank manufacturing processRaw materialThe raw materials are purchased from Saudi Arabia, Malaysia, and Hong Kong. The main rawmaterials used are LLDPE and master granules.Accelerator operationIn this process, the LLDPE and master granules are mixed in the ratio of 6:1 by weight. Theresulting mixture is then heated gently to produce solid homogenous mixture. The function ofLLDPE is to impart color on tank while master granules are used for the formation of structureof tank.Screw machiningThe solid homogenous mixture obtained from above process is transformed into the thin wireform of diameter approximately 0.7mm by drawing process through the screw machining. Themixture obtained is in hot state so it is passed through the cold water to cool it. The obtained wireis then cut into small pieces of length of approximately 0.9mm. This process is called wirecutting.Powder machiningThe material obtained from screw machining is fed to the hoper of the powder machine and isgrinded to obtain the powder. The obtained powder might contain some granules which isseparated by driving the powder to the height of 3m with the help of two motors at the bottomsurface.Temporary storageThe powdery material obtained from powder machine is stored into dry nylon sack, which isfrequently used for tank production.Die fillingThe die is coated with a fine grease layer to its internal surface and then the powder obtainedfrom the powder machine is fed to the die and is capped properly.Uniform heatingThe die along with mixture is heated uniformly. The rotating motion of die is controlled byelectronic control panel. The process where the rotating motion of die is controlled throughcontrol panel and die is heated uniformly by rotating it is called roto molding process. The die isheated for 15-20 minute and temperature of die is controlled by control panel.TankThe tank is taken out of the die and then it is cooled by means of air (either by use of electric fanor by use of natural air). The tank taken out of die the normally need no additional finishingprocess but in some cases soft filing can be carried out to remove some unwanted plastic scrapsassociated with the product. 17
  18. 18. Downloaded from www.binodpandey.wordpress.comProduction of Buckets, Jugs etc. Raw material Storeage Injection Moulder Required Product (bucket, jug etc) Fig. Process flow diagram for household itemsRaw material The raw materials are purchased from Saudi Arabia, Malaysia, and Hong Kong. Themain raw material used is HDPE.Injection molder One of the most common methods of shaping plastic resins is a process called injectionmolding. Injection molding is accomplished by large machines called injection moldingmachines. Resin is fed to the machine through the hopper. Colorants are usually fed to the machinedirectly after the hopper. The resins enter the injection barrel by gravity though the feed throat.Upon entrance into the barrel, the resin is heated to the appropriate melting temperature. 18
  19. 19. Downloaded from www.binodpandey.wordpress.comThe resin is injected into the mold by a reciprocating screw or a ram injector. The reciprocatingscrew offers the advantage of being able to inject a smaller percentage of the total shot (amountof melted resin in the barrel). The ram injector must typically inject at least 20% of the total shotwhile a screw injector can inject as little as 5% of the total shot. Essentially, the screw injector isbetter suited for producing smaller parts.The mold is the part of the machine that receives the plastic and shapes it appropriately. Themold is cooled constantly to a temperature that allows the resin to solidify and be cool to thetouch. The mold plates are held together by hydraulic or mechanical force. The clamping forceis defined as the injection pressure multiplied by the total cavity projected area. Typically moldsare overdesigned depending on the resin to be used. Each resin has a calculated shrinkage valueassociated with in.Required ProductThe required product is then obtained from the injection molding process. The size and type ofproduct can be varied by varying the molder. By this process, we can obtain jugs, mugs andbuckets. 19
  20. 20. Downloaded from www.binodpandey.wordpress.comPlastic RecyclingThe slogan “GO GREEN” is increasingly becoming popular and in fact essential to protectenvironment. As we know, plastics are non degradable they help to pollute environment. If it isrecycled, then environment pollution due to plastics can be reduced.It is difficult to trace back when exactly the recycling would have started. On the basis ofinformal interaction with various people in the field of recycling it may be suggested thatrecycling of the waste generated from the manufacturing and processing units would have beenthe first step. The machinery required for the reprocessing is technically similar to the processingmachinery.Process flow diagram Plastic Waste Collection Plastic Waste Storage Washing Crushing Temopary storage injection moulder Required Product Fig. Process flow diagram for dustbins and road dividers 20
  21. 21. Downloaded from www.binodpandey.wordpress.comPlastic waste collectionPlastics are widely used and are one of the main ingredients of environment pollution. The wasteplastics collected by scavengers are bought by the company which is later utilized to producevarious plastic products.Plastic waste storageThe waste plastics that is bought by company is then stored in raw storage.WashingThe collected plastics may contain unwanted particles; they may contain those particles whichmay affect the production process. So, to remove those unwanted particles it is first fed to thewashing room where it is washed by water, detergents and other chemicals if required.CrushingThe washed plastic waste is then sent to crusher for crushing. Crusher transforms those plasticwaste into small granular particles.Injection molder A mold is bolted into the Clamping section of the machine. The machine closes the mold, thenapplies a large force to “Lock” the mold closed. Inside the closed mold is a cavity that is theexact shape of the plastic part. The Injection section of the machine has a hopper to hold plastic pellets; a barrel withheater bands to liquefy the plastic pellets; a feed screw to move the pellets forward in the barrel;a check valve to force the liquid plastic into the mold, and a nozzle to seal the injection section tothe mold. The liquefied plastic is forced into the cavity of the mold with high pressure. 21
  22. 22. Downloaded from www.binodpandey.wordpress.comOnce the liquid plastic has been injected into the mold, the machine goes into the Cooling phase.The liquid plastic must cool enough to turn solid so it takes on the shape of the cavity and staysthat way. While the cooling take place, the screw will rotate, bringing in more pellets for nextpart. When the part is ready to be removed from the mold, the clamp will open, and the part will beremoved from one half of the mold. Then the part will be Ejected from the other half of themold, and the machine will start a new cycle.Required productFinally, we can obtain dust pans, toys etc. 22
  23. 23. Downloaded from www.binodpandey.wordpress.com Financial Analysis Nrs. In’000 1. Fixed Assets Investment 103945 a) Long Term Loan 62367 b) Owner’s Equity 41578 2. Initial Working Capital 66334.01 a) Short Term Loan 24756.01 b) Owner’s Equity 41578 3. Total Investment (initially) 128701.01 a) Long term Loan 62367 b) Short term Loan 24756.01 c) Owner’s Equity 41578 Fixed Asset Investment Nrs. In ‘000 7. Land and land development 44000 a) Land 5 ropani@ 80 lakh/ropani 40000 b) Land development @ 10% 4000 8. Building and civil construction 25245 a) Manufacturing facility i) Manufacturing area including all sections 5400 sq.ft. @1500 8100 ii) Quality control, store and administration 10800 sq.ft. @1200 12960 b) Refreshment and guard house 2700 sq.ft. @ 700 1890 c) Waste disposal management Subtotal 22950 Contingencies @ 10% 2295 23
  24. 24. Downloaded from www.binodpandey.wordpress.com 9. Plant, machineries & equipments 20700 For PVC Tank a) Plastic Extruder 200 b) Plastic Crusher 150 c) Rock n Roll type Roto Moulding Machine 200 d)Bi-axial Moving Oven Type Machine 500 e) Dies 1000 For Plasticraft a) Injection Moulder (Indian+ Chinese) 9000 b) Control Panel 500 Recycling Plant a) Crusher 150 b) Extruder 200 c) Injection Moulder 4000  Transformer (250KVA) + stabilizers 800  Generator 4000 10. Furniture & fixture 1000 a) Office furniture 350 b) Factory furniture 150 c) Office equipments + computers 500 11. Vehicles 12000 a) Delivery van-2 3000 b) Truck-1 2000 c) Car-3 6000 d) Motorcycle-5 1000 12. Pre-operating cost 1000 a) Feasibility report 100 b) Engineering design, construction & management 500 c) Registration 100 d) Technical consultancy 200 e) Miscellaneous 100 Total Fixed Assets 103945 Long Term Loans @ 60% 62367 Owner’s Equity @ 40% 41578 24
  25. 25. Downloaded from www.binodpandey.wordpress.com Annual Operating CostA] Fixed Cost 1. Depreciation 5116.25 a) Building & civil construction @ 5% 1526.25 b) Machinery & equipments @ 10% 1590 c) Vehicles @ 15% 1800 d) Furniture & fixture @ 20% 200 2. Amortization on pre-operating expenses @ 10% 100 3. Insurance on fixed asset (except land & pre-operating expenses) @ 1% (1% of 59425000) 594.25 4. Office overheads 1270 a) Office material/stationery 200 b) Advertisement & Goodwill 500 c) Audit & legal expenses 100 d) Communication 120 e) Repair & maintenance 250 f) Miscellaneous 100 5. Interest on long term loan Rs 62655000 @ 15% 9398.52 6. Indirect labor (23-number) 4778.80 a) Managing director-1 @ Rs.50,000/month 600 b) Production manager-1 @ Rs.40,000/month 480 c) Marketing manager-1 @ R.s40,000/month 480 d) Finance manager-1 @ Rs.20,000/month 240 e) Administration manager-1 @ Rs.20,000/month 240 f) Sales Officers-5 @ Rs. 15,000/month 900 25
  26. 26. Downloaded from www.binodpandey.wordpress.com g) Accountant-1 @ Rs. 15,000/month 180 h) Administrative staffs-3 @ Rs. 10,000/month 360 i) Storekeeper-2 @ Rs. 10,000/month 240 j) Drivers-3 @ Rs. 8,000/month 288 k) Watchmen & Helpers- 3 @ Rs. 6,000/month 216 l) Sweepers @ cleaners-2 @ Rs. 5,000/month 120 Subtotal 4344 Plus 10% fringe bonus 434.40 Total Fixed Cost 21257.82B] Variable Cost 1. Utilities 57650 a) Electricity 4000000 units @ Rs 8/unit 32000 b) Water 50 c) Fuel(LPG) 25600 2. Repair & maintenance 1907.45 a) Building & civil construction @ 1% 252.45 b) Vehicle @ 5% 600 c) Machinery & equipment @ 5% 1035 d) Furniture & office equipment @ 2% 20 3. Raw material & Inputs ( ref. Annex) 384180 a) Active raw material (pellet); (7520 X 300) @ Rs.160 360960 b) Raw material from recycle plastics (430 X 300) @ Rs. 180 23220 26
  27. 27. Downloaded from www.binodpandey.wordpress.com 4. Interest on short term loan Rs. 81279990 @ 14% 11379.20 5. Variable Overheads 400 a) For production 250 b) For administration 150 6. Direct Labor (no-18) 3300 a) Supervisior-3 @ Rs. 20000/month 720 b) Skilled labor (Operator)-10 @ Rs. 15000/month 1800 c) Unskilled labor-5 @Rs. 8000/month 480 Subtotal 3000 Plus 10% fringe benefits 300 7. Sales Promotional Expenses (10% of net income Rs.677.175 X106 ) 67717.50 Total variable costs 526534.15 27
  28. 28. Downloaded from www.binodpandey.wordpress.com Annual Production CostS.N. Year of Operation 1 2 3 4 5 6 7 % Capacity utilization 30 40 50 60 70 80 100 1 Raw materials 115254.00 153672.00 192090.00 230508.00 268926.00 307344.00 384180.00 2 Direct Labour 990.00 1320.00 1650.00 1980.00 2310.00 2640.00 3300.00 3 Utilities 17295.00 23060.00 28825.00 34590.00 40355.00 46120.00 57650.00 4 Repair Maintenance 572.24 762.98 953.73 1144.47 1335.22 1525.96 1907.45 5 Prime Cost(1+2+3+4) 134111.24 178814.98 223518.73 268222.47 312926.22 357629.96 447037.45 6 Varriable Overhead 120.00 160.00 200.00 240.00 280.00 320.00 400.00 7 Sales Promotion Expenses 20315.25 27087.00 33858.75 40630.50 47402.25 54174.00 67717.50 Administration 8 6643.05 6643.05 6643.05 6643.05 6643.05 6643 Overheads* 6643.05 9 Factory cost(5+6+7+8) 161189.54 212705.03 264220.53 315736.02 367251.52 418767.01 521798.0010 Maturities** 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25 5216.2511 Financial Costs*** 12864.09 13994.57 14185.23 14375.88 14566.54 14757.19 16078.32 Production12 Costs(9+10+11) 179269.88 231915.85 283622.01 335328.15 387034.31 438740.45 543092.57 *Administrative Overheads include indirect labour, Insurance and Office Overhead **Maturities include depreciation and amortization *** Financial Costs from loan repayment 28
  29. 29. Downloaded from www.binodpandey.wordpress.com Working Capital Estimation Year of Operation 1 2 3 4 5 6 7 M % Capacity Utilization 30 40 50 60 70 80 100I Current Assets 1.Inventories a) Raw material 25 9604.50 12806.00 16007.50 19209.00 22410.50 25612.00 32015.00 3 b)Work in Progress* 2 894.08 1192.10 1490.13 1788.15 2086.18 2384.20 2980.25 c) Finished Goods** 15 8059.48 10635.25 13211.03 15786.8 18362.58 20938.35 26089.9 2. Account Receivable*** 30 20315.25 27087.00 33858.75 40630.50 47402.25 54174.00 67717.50 6 3.Cash in Hand /requirement**** 25 3827.96 4919.42 6010.88 7102.34 8193.79 9285.25 11468.17 1 42701.2 56639.7 70578.2 84516.7 98455.3 112393.8 140270.8 1 Total Current Assets 7 7 9 9 0 0 2II Current Libalities Account payable***** 25 1441.25 1921.67 2402.09 2882.50 3362.92 3843.34 4804.17 41260.0 54718.1 68176.2 81634.2 95092.3 108550.4 135466.6 1III Net Working Capital 1 0 0 9 8 6 5 Increase In working Capital 41260.01 13458.09 13458.10 13458.09 13458.09 13458.09 26916.19IV Working Capital Mangement Short term loan(60% of NWC) 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 81279.99 8 Owners Equity (40% ofNWC) 16504.01 21887.24 27270.48 32653.72 38036.95 43420.19 54186.66 5 Increase in Owners Equity 16504.01 5383.24 5383.24 5383.24 5383.24 5383.24 10766.47 29
  30. 30. Downloaded from www.binodpandey.wordpress.com Term Loan RepaymentLong Term Loan Repayment Year of Operation 1 2 3 4 5 6 7 8Loan at thebeginning 62655.00 62655.00 56389.50 50124.00 43858.50 37593.00 31327.50 25062.00Repayment onannual basis 0.00 6265.50 6265.50 6265.50 6265.50 6265.50 6265.50 6265.50Loan at the end ofyear 62655.00 56389.50 50124.00 43858.50 37593.00 31327.50 25062.00 18796.50Interest payment@ 15% 9398.25 9398.25 8458.43 7518.60 6578.78 5638.95 4699.13 3759.30Debt Servicing* 9398.25 15663.75 14723.93 13784.10 12844.28 11904.45 10964.63 10024.80*debt servicing=amount to be paid annually =repayment of LTL+interest in LTLShort Term Loan Repayment Year of Operation 1 2 3 4 5 6 7 8STL 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 81279.99 81279.99Interest on STL @14% 3465.84 4596.32 5726.80 6857.28 7987.76 9118.24 11379.20 11379.20Financial costs** 12864.09 13994.57 14185.23 14375.88 14566.54 14757.19 16078.32 15138.50**financial costs= interest on STL and LTL 30
  31. 31. Downloaded from www.binodpandey.wordpress.com Profit and Loss StatementYear of Operation 1 2 3 4 5 6 7% Capacity utilization 30 40 50 60 70 80 100Sale Revenue/net income 203152.50 270870.00 338587.50 406305.00 474022.50 541740.00 677175.00less: Operating cost 161189.54 212705.03 264220.53 315736.02 367251.52 418767.01 521798.00Gross Operating Profit 41962.96 58164.97 74366.97 90568.98 106770.98 122972.99 155377.00Less: maturities* 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25EBIT 36746.71 52948.72 69150.72 85352.73 101554.73 117756.74 150160.75Less: Financial Cost** 12864.09 13994.57 14185.23 14375.88 14566.54 14757.19 16078.32EBT 23882.62 38954.15 54965.49 70976.85 86988.19 102999.55 134082.43Less: Tax @ 20% 4776.52 7790.83 10993.10 14195.37 17397.64 20599.91 26816.49profit after tax 19106.10 31163.32 43972.39 56781.48 69590.55 82399.64 107265.94Less: Profit distributed+commission+bonus 11463.66 18697.99 26383.44 34068.89 41754.33 49439.78 64359.57Net saving 7642.44 12465.33 17588.96 22712.59 27836.22 32959.86 42906.38Cumulative saving 7642.44 20107.77 37696.72 60409.32 88245.54 121205.39 164111.77*maturities include Depreciation and amortization** Financial cost s= interest on STL and LTLOperating cost =factory costCorparate tax rate is 25% but accorfing to industrial policy 2067, we get tax concession of 5% 31
  32. 32. Downloaded from www.binodpandey.wordpress.com Cash Flow ProjectionYear of operation 0 1 2 3 4 5 6 7% Capacity utilization 0 30 40 50 60 70 100 100A. Cash Inflow 1.Equity on a)Fixed Assets 41770.00 b)Working Capital 16504.01 21887.24 27270.48 32653.72 38036.95 43420.19 54186.66 2.Long Term Loan 62655.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.Short Term Loan 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 81279.99 4.Gross Operating Profit 41962.96 58164.97 74366.97 90568.98 106770.98 122972.99 155377Total Inflows 104425.00 83222.98 112883.07 142543.17 172203.27 201863.36 231523.46 290843.65 2B. Cash Outflow 1.Capital Expenditure 104425.00 2.Repayment of STL 0.00 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 3.Repayment of LTL 0.00 6265.50 6265.50 6265.50 6265.50 6265.50 6265.50 4.Interest on STL 3465.84 4596.32 5726.80 6857.28 7987.76 9118.24 11379.20 5.Interest on LTL 9398.25 9398.25 8458.43 7518.6 6578.78 5638.95 4699.13 6.Working Capital (increase) 16504.01 5383.24 5383.24 5383.24 5383.24 5383.24 10766.47 7.Tax 4776.52 7790.83 10993.1 14195.37 17397.64 20599.91 26816.49 8. Profit distributed+bonus +commission 11463.66 18697.99 26383.44 34068.89 41754.33 49439.78 64359.57Total Outflow 104425.00 45608.28 76888.14 96041.37 115194.60 134347.82 153501.05 189416.64 1C. Net Cash Flow 0.00 37614.70 35994.93 46501.80 57008.67 67515.54 78022.41 101427.01D.Cumulative Cash Flow 0.00 37614.70 73609.63 120111.43 177120.10 244635.64 322658.05 424085.06 5 32
  33. 33. Downloaded from www.binodpandey.wordpress.com Balance Sheet Year Items 1 2 3 4 5 6 7 8AssetsLong term Assets: Land,plant and equipment 104425.00 104425.00 98159.50 91894.00 85628.50 79363.00 73097.50 66832.Current Assets:Accounts receivable 20315.25 27087.00 33858.75 40630.50 47402.25 54174.00 67717.50 67717.Inventories (goods andmaterials 18558.06 24633.35 30708.66 36783.95 42859.26 48934.55 61085.15 61085.Cash In Hand 3827.96 4919.42 6010.88 7102.34 8193.79 9285.25 11468.17 11468.Total Current Asset 42701.27 56639.77 70578.29 84516.79 98455.30 112393.80 140270.82 140270Total Assets 147126.27161064.77168737.79 176410.79184083.80191756.80 213368.32 207102LiabilitiesLong-term liabilities:Total long-term loans 62655.00 62655.00 56389.50 50124.00 43858.50 37593.00 31327.50 25062.Current liabilities:Account Payable 1441.25 1921.67 2402.09 2882.50 3362.92 3843.34 4804.17 4804.working Capital 41260.01 54718.10 68176.20 81634.29 95092.38 108550.46 135466.65 135466.Total Current Liabilities 42701.26 56639.77 70578.29 84516.79 98455.30 112393.80 140270.82 140270.Owners Equity 41770.00 41770.00 41770.00 41770.00 41770.00 41770.00 41770.00 41770.Total Liabilities + Equity 147126.26 161064.77 168737.79 176410.79 184083.80 191756.80 213368.32 207102 33
  34. 34. Downloaded from www.binodpandey.wordpress.comPayback Period Payback Period Nrs. In000Year Net Cash Flow Cumulative Cash Flow 0 -104425.00 -104425.001 37614.7 -66810.302 35994.93 -30815.373 46501.8 15686.434 57008.67 72695.105 67515.54 140210.646 78022.41 218233.057 101427.01 319660.068 96344.53 416004.599 96645.26 512649.8510 96946.02 609595.87 discount rate 15% payback perid 2 years 8 months NPV at 15% discount 180027.22 rate IRR for 10 year period 46% Ratio AnalysisCurrent Ratio 1.52Debt/Equity Ratio 1.50Inventory Turnover 1.80Gross Profit Margin 0.23Net Profit Margin 0.16Return on Assets 0.50 34
  35. 35. Downloaded from www.binodpandey.wordpress.com Sensitivity Analysis Nrs. In000 Sale Revenue 677175.00 Annual Operating Cost Fixed Cost 21257.82 Variable Cost 526534.15 BEP 14.11% Raw material Cost 384180.00 Material Cost Variable Cost Revenue BEP %A.If 10% decrease on raw material cost 345762.00 488116.15 677175.00 11.24 677175.00B. If 10% increase on raw material cost 422598.00 564952.15 18.94C. If 10% decrease on revenue 384180.00 526534.15 609457.50 25.00D.If 10% increase on revenue 384180.00 526534.15 744892.50 9.74 Hence 10% decrease on the revenue is highly sensitive 35
  36. 36. Downloaded from www.binodpandey.wordpress.comEnvironmental Assessment 1. Kshitiz Multicraft is located at chovar and site is far from residential area. 2. All machine and equipment are modern and environment friendly and energy efficient. 3. There will be noise control mechanism in the Industry so there will be no sound pollution 4. Safe and healthy working environment will be incorporated in the industry. 5. Awareness will be encouraged to keep the area close to the plant neat and clean. 6. Baseline studies on the existing environmental quality at the project site will be done and any affect resulting from the plant will be studied. 7. Implementation of Waste water treatment system reduces risk of water contamination. 36
  37. 37. Downloaded from www.binodpandey.wordpress.comSWOT AnalysisStrengths  Sound economic condition of organization  Simplification and diversification of products  Products are reliable  Emissions of less pollutants and chemicals  Increasing demand of productsWeakness  Difficult to tackle the existing products  Poor penetration strategy  Limited infrastructure  Lack of qualified workers  Politically motivated workers  Less utilization of space and poor plant layout  Improper maintenanceOpportunity  Increasing industries  Nepal entering WTO  Increasing modernization  Increase in per capita income  Possibility of training and skill development programs for the personnel as well as operatorThreat  Competitive market  Instable political scenario  Poor and ineffective government policy  Global recession  Possibility of decreasing demand  Change in consumer behavior about plastics  Insufficient electrical power 37
  38. 38. Downloaded from www.binodpandey.wordpress.comExisting Rules and Regulations Kshitiz Multicraft is a partnership form of organization consisting of six members aspartners. All the rules and regulation as per the general partnership organization are followed.The company is registered under the act of large scale industry and is vowed to fulfill all therules, regulation and norms of the company act.Documents required for the company registration: 1. Registration Application 2. Citizenship certificate of the owner 3. Agreement paper between the partners if the company is Partnership Company 4. Certificate of EIA. 5. No objection letter from the boundary of the neighbourhood of the landsite. 6. Busines plan of the firm. 7. Private, Partnership or joint stock is registered under small, medium or large industries according to the amount of capital investment under company act 2008 8. Design of trademark & structure of the company.Services Provided by Dept. of Industry A) Related to Company Property 1. Trademark Registration Documents: Application and required document Apply to: Director of Industrial department branch Time: 4 months 2. Industrial Design Registration Documents: Appplication and required document Time: one month 3. Patent Registration Time: 12 month B) Related to technology and environment 1. Approval of work list ( terms of reference) Time: 3 days 2. Approval of Initial Environment Examination(IEE) Time: 6 days. 3. Approval of Environment Impact Assessment(EIA) Time: 3 days 4. Determine and approval of norms: Time: 5 days 38
  39. 39. Downloaded from www.binodpandey.wordpress.com C) Related to permission and industry registration Apply: To permission and registration department 1. Industry registration Time: 6 days 2. Increment of capital, capacity of industry Time: 6 days 39
  40. 40. Downloaded from www.binodpandey.wordpress.comExpansion PossibilityKshitiz Multicraft Pvt. Ltd. Has great expansion goal. Kshitiz is planning to extend its productsin near future to following products 1. PVC Pipes and fitings 2. PPR Pipes and fittings 3. HDPE pipes 4. Polyethene cabinets for television, air conditioners etc. 5. Containers for colors. 6. Polycarbonate corrugated sheet. 7. Multifibre window glass. 40
  41. 41. Downloaded from www.binodpandey.wordpress.comBibliography 1. Websites: a. www.google.com b. www.cro.gov.np c. www.nepalchamber.org 2. Export Watch Manufacturer Business Plan from www.bplans.com 3. Business Start-up Proposal by David Cutler, Lym Close and Lyme Regis june 2010 4. Various Previous business plan reports i. A report on Packaging Industry ii. Business plan report on Patal PVC tank. 41
  42. 42. Downloaded from www.binodpandey.wordpress.com Annex Production Cost Price Weight Rate(Kg) Total weight ofItems Quantity Rates(Rs) Total Cost(Rs) of pellet pellet(kg)PlasticraftBucket (Big) 200 250 50000 0.75 150Bucket (Small) 100 100 10000 0.3 30Tub 200 250 50000 0.75 150Jug 300 25 7500 0.1 30 Total 117500 360Water storage Tank250 l 70 1875 131250 8 560500 l 70 3750 262500 15 10501000 l 150 7200 1080000 25 37502000 l 40 14000 560000 45 1800 Total 2033750 7160Recyling ProductDustbin 50 2000 100000 8 400Traffic Divider 10 600 6000 3 30 Total 106000 430NOTE: The above data are of only one day,when the plants are operating at 100% capacitySale Revenue=Rs. 77175000Working day = 300/year Payback Period Calculation Payback period = year before full recovery + unrecovered cost at start of year Cash flow during that year 42

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